Fundamentals of Statistics (5th Edition)
5th Edition
ISBN: 9780134508306
Author: Michael Sullivan III
Publisher: PEARSON
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Textbook Question
Chapter 12.3, Problem 19AYU
CEO Performance (Refer to Problem 31 in Section 4.1) The following data represent the total compensation for 12 randomly selected chief executive officers (CEOs) and the company’s stock performance in 2013.
Company | Compensation (millions of dollars) | Stock Return (%) |
Navistar International | 14.53 | 75.43 |
Aviv REIT | 4.09 | 64.01 |
Groupon | 7.11 | 142.07 |
Inland Real Estate | 1.05 | 32.72 |
Equity Lifestyles Properties | 1.97 | 10.64 |
Tootsie Roll Industries | 3.76 | 30.66 |
Catamaran | 12.06 | 0.77 |
Packaging Corp of America | 7.62 | 69.39 |
Brunswick | 8.47 | 58.69 |
LKQ | 4.04 | 55.93 |
Abbott Laboratories | 20.87 | 24.28 |
TreeHouse Foods | 6.63 | 32.21 |
Source: Data from Chicago Tribune, June 1, 2014
- a. Treating compensation as the explanatory variable, x, determine the estimates of β0 and β1.
- b. Assuming the residuals are
normally distributed , test whether a linear relation exists between compensation and stock return at the α = 0.05 level of significance. - c. Assuming the residuals are normally distributed, construct a 95% confidence interval for the slope of the true least-squares regression line.
- d. Based on your results to parts (b) and (c), would you recommend using the least-squares regression line to predict the stock return of a company based on the CEO’s compensation? Why? What would be a good estimate of the stock return based on the data in the table?
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A sample of 20 financial analysts was asked to provide forecasts of earnings per share of a corporation for next year. The results are summarized in the following table:Forecast ($ per share) Number of Analysts$9.95 to under $10.45 2$10.45 to under $10.95 8$10.95 to under $11.45 6$11.45 to under $11.95 3$11.95 to under $12.45 1a. Estimate the sample mean forecast.b. Estimate the sample standard deviation.
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Lower
Bound
0
10
20
30
40
50
60
70
80
90
Sum
Upper
Bound
10
20
30
40
50
60
70
80
90
100
Cell
Midpoint
5
15
25
35
45
55
65
75
85
95
Frequency
43
55
16
3
2
1
9
4
5
6
144
a. Find the mean percentage loss for the sample of firms who reported some loss.
b. Find the median, upper and lower quartiles.
c. Draw the box plot.
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e.…
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Price Change
Price Change
Company
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John & John.
Aflac
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0.81
0.05
1.46
0.92
Loews Cp
Nokia
0.21
0.97
Cablevision
0.41
Diageo
Flour Cp
1.32
2.37
SmpraEngy
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Goodrich
0.4
0.22
Provide 95% confidence interval estimates of the population variance and the population standard
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Chapter 12 Solutions
Fundamentals of Statistics (5th Edition)
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